Snap's (SNAP) first-ever quarterly earnings as a public company are in and the results weren't what Wall Street was hoping for. The social media upstart posted revenue that fell short of analysts' estimates and slower user growth than was expected, causing shares to plummet more than 23% to $17.60 after-hours on Wednesday and shaving off nearly a quarter of the stock's value. The stock price is just barely above Snap's initial offering price of $17.
For the fiscal first quarter, Snap reported a loss of $2.21 billion, or $2.31 per share, up from the $104.6 million it saw during the same period one year ago -- a cost that the company attributed to $2 billion worth of compensation-related expenses tied to its initial public offering in March. Of those expenses, CEO Evan Spiegel received a $750 million bonus for taking the company public.
Among other key figures, revenue jumped 286% year-over-year to about $150 million, but that still fell short of Wall Street's expected $158 million. Revenue also declined from the fourth quarter, when Snap's total sales were roughly $166 million.
Daily active users, a closely watched number in the report, grew 5% quarter-over-quarter to 166 million, compared to analysts' projected 168 million DAUs. Despite being lower-than-expected, Snap's user growth improved compared to the fourth quarter, when its DAUs grew 4% quarter-over-quarter. Still, Snap's user numbers pale in comparison to Facebook (FB) , arguably Snap's biggest rival, who just said it reached nearly 2 billion monthly users.
Snap's fierce competition with Facebook was also a widely discussed topic on the company's earnings call late Wednesday. When asked outright whether Facebook scares him, Spiegel said Snap is attacking issues like that through product innovation and creativity.
"I think the bottom line is like...people are going to copy your products if you make great stuff," Spiegel told investors on the call. "I think we see this happening a lot in technology. When Alphabet's (GOOGL) Google came along everyone really felt like they needed a search strategy...And I think at the end of the day, just because Yahoo! (YHOO) has a search bar doesn't mean that they are Google."
Facebook has released a number of Stories-like features across its various properties over the past year. Instagram Stories, widely considered to be its most successful Stories clone, has amassed more than 200 million users, which is 34 million more than Snapchat's 166 million users.
Spiegel detailed other ways that the company is trying to hold onto users, such as improving the Snapchat user experience on Android. Snap has been criticized for focusing more on Apple (AAPL) iOS users over Android customers, but Spiegel said on the call that the company has made improvements on the app and has seen an increase in Android users as a result. Approximately 30% of new Snapchat users during the quarter were on Android, up from 20% in the fourth quarter.
Additionally, more than 3 billion Snaps were sent in the first quarter, up from about 2.5 billion Snaps during the previous quarter. Spiegel noted that users are spending more than 30 minutes per day on the app, which is higher than Instagram's average time spent of 15 minutes.
Chief Strategy Officer Imran Khan and CFO Drew Vollero also joined Spiegel on the call, during which they detailed the progress of Snap's various advertising initiatives and media partnerships. Snap rolled out a slew of new features for brands, such as Snap to Store, which Khan referred to as the "holy grail" of ad measurement, because it allows brands to measure which ads are driving foot traffic to physical stores. He pointed to a holiday ad campaign run by Hollister which drove 63,000 to its stores.
Outside of advertising, Vollero said Snap's Other Revenues category saw $8.3 million in sales, primarily driven by Spectacles. That's an increase from the $4.5 million recorded in Other Revenues in the fourth quarter.
And while Snap executives gave investors a relatively transparent look into their financial health, they were noticeably cryptic about the company's product road map, as is customary for Snap. When asked how he sees the product road map progressing throughout the course of the year, Spiegel quickly deflected the question, leaving a lot to desire for investors.
"We're kind of famous for not giving guidance on the product pipeline, but we're obviously really excited...and we love surprising our community," Spiegel said. "So it should be a fun rest of the year."